AI-Driven Cybercrime and the Rise of Defensive Tech: Identifying Undervalued Cybersecurity Stocks for 2025

The cybersecurity landscape in 2025 is defined by a paradox: AI, once hailed as a transformative force for good, is now a double-edged sword. Cybercriminals are weaponizing artificial intelligence to automate attacks, craft hyper-personalized scams, and bypass traditional defenses at unprecedented scales. Meanwhile, enterprises and insurers are racing to adopt AI-driven solutions to counter these threats. For investors, this dynamic creates a unique opportunity to identify undervalued stocks in the defensive tech sector—companies innovating in AI threat detection, ransomware response, and enterprise risk management.

The Escalation of AI-Driven Cybercrime

AI misuse has fundamentally altered the nature of cyberattacks. Cybercriminals now leverage machine learning to profile victims by analyzing browser behavior, social media activity, and transactional data, enabling highly targeted phishing and business email compromise (BEC) schemes [1]. Ransomware attacks have also evolved: AI automates reconnaissance, encryption, and even extortion tactics, with 87% of organizations reporting AI-powered breaches in the past year [2]. Deepfake technology, once a novelty, is now a tool for fraud, with attackers impersonating executives to bypass KYC verification or execute fraudulent transactions [3].

The democratization of cybercrime-as-a-service (CaaS) platforms has further amplified the threat. Even non-technical actors can now deploy AI-generated ransomware or synthetic invoices with minimal effort, lowering barriers to entry and increasing the global attack surface [4]. This arms race demands a new generation of defenses—ones that leverage AI not just to react, but to predict and preempt threats.

AI-Powered Defenses: The New Frontline

Enterprises are increasingly adopting AI-driven cybersecurity platforms to counter these threats. Automated Security Operations Centers (SOCs) now use agentic AI to triage incidents, reducing response times from hours to seconds [5]. Predictive intelligence tools scan global threat data to forecast attack vectors, while multi-modal verification systems detect deepfakes and synthetic phishing emails [6]. Zero Trust architectures, enhanced by AI, continuously validate user behavior and access rights, identifying anomalies in milliseconds [7].

Among the leaders in this space, Darktrace (IOT) and SentinelOne (S) stand out. Darktrace’s AI platform autonomously neutralizes threats by learning normal network behavior, as demonstrated in a 2025 case where it thwarted a ransomware attack on a healthcare provider [8]. SentinelOne’s Singularity XDR platform combines endpoint detection with AI-driven ransomware response, achieving a 98% threat detection rate [9]. Both companies are undervalued relative to their growth trajectories:

trades at a forward P/S ratio of 6, while Darktrace’s revenue grew 23% YoY [10].

The Insurance Market’s AI Transformation

The insurance sector is also adapting to AI-driven risks. Munich Re projects the global cyber insurance market will reach $16.3 billion in 2025, with AI enabling insurers to refine risk assessment and fraud detection [11]. For example, AI improves pricing accuracy by analyzing real-time data on an organization’s cybersecurity posture, while deepfake detection tools reduce fraudulent claims by 40% [12]. However, insurers face new vulnerabilities: cybercriminals are using AI to automate attacks on policyholders, including BEC scams that mimic executives [13].

Companies like IBM (IBM) and BlackBerry (BB) are positioning themselves as key players in this evolving market. IBM’s GenAI business, which surged past $7.5 billion in Q2 2025, integrates AI into hybrid cloud security, while BlackBerry’s Cylance platform uses machine learning to prevent malware on industrial systems [14]. IBM’s adjusted EPS grew 15% YoY, and its forward P/E ratio of 22x suggests undervaluation relative to its AI-driven cybersecurity offerings [15].

Strategic Investment Opportunities

The most compelling opportunities lie in companies combining AI innovation with strong financial fundamentals:
1. SentinelOne (S): A 33% YoY revenue growth and a forward P/S of 6 make it a high-growth, low-valuation play. Its partnership with Lenovo to pre-install Singularity on PCs signals expanding market penetration [16].
2. Darktrace (IOT): With a 23% revenue increase and a focus on autonomous threat response, its AI-driven platform is a hedge against escalating ransomware risks [17].
3. IBM (IBM): A diversified AI and cloud security leader, IBM’s GenAI division and 8% revenue growth position it to benefit from both enterprise and insurance market demand [18].

Conclusion

As AI-driven cybercrime becomes the new normal, enterprises and insurers will increasingly rely on AI-powered defenses. For investors, the key is to identify companies that are not only innovating in threat detection but also trading at valuations that reflect their long-term potential. SentinelOne, Darktrace, and

exemplify this balance, offering exposure to a sector poised for sustained growth.

Source:
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[17] SentinelOne Announces Second Quarter Fiscal Year 2025 Financial Results [https://investors.sentinelone.com/press-releases/news-details/2024/SentinelOne-Announces-Second-Quarter-Fiscal-Year-2025-Financial-Results/default.aspx]
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